On Feb. 21, 2025, the federal district court for the District of Maryland issued a preliminary injunction partially enjoining two of President Trump’s executive orders: Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan. 20, 2025)(J20 Order) and Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025)(J21 Order).

The Court’s ruling focused on three provisions of the executive orders:

• The “Termination Provision” of the J20 Order directing federal agencies to terminate “equity-related” grants and contracts;
• The “Certification Provision” of the J21 Order directing federal agencies to require federal contractors and grantees to certify under penalty of the False Claims Act that they do not operate programs promoting DEI that violate discrimination laws; and
• The “Enforcement Threat Provision” of the J21 Order directing the Attorney General to take actions to “deter DEI programs or principles . . . that constitute illegal discrimination or preferences,” including drafting a report recommending actions and identifying corporations, higher education institutions or certain other entities for “civil compliance investigations.”

The plaintiffs in the case are the National Association of Diversity Officers in Higher Education, the American Association of University Professors, Restaurant Opportunities Centers United, and the Mayor and City Council of Baltimore. The Court ruled that the plaintiffs had demonstrated a likelihood of prevailing on their claims that the J20 and J21 executive orders suffered from an unconstitutional vagueness and that they abridge freedom of speech, among other infirmities. The Court also found that the plaintiffs had demonstrated that the plaintiffs would be irreparably harmed if the executive orders were to be implemented while further judicial proceedings are held to ultimately determine the legality of the executive orders. The Court went on to find that a nationwide injunction was appropriate.

Therefore, the Court issued a preliminary injunction preventing federal agencies from:

• Freezing, terminating or changing the terms of any existing grants or contracts, on the basis of the Termination Provision in the J20 Order;
• Requiring any grantee or contractor to make any “certification” or other representation pursuant to the Certification Provision; and
• Bringing any “False Claims Act enforcement action, or other enforcement action,” pursuant to the Enforcement Threat Provision.

Notably, the scope of the injunction issued by the Court was not as all-encompassing as the plaintiffs had requested. The Court expressly declined to enjoin the Attorney General from preparing a report of recommendations on strategic steps to “encourage the private sector to end illegal discrimination and preferences, including DEI” or from engaging in investigations of potential violations federal anti-discrimination laws pursuant to the Enforcement Threat Provision.

As a result of the Court’s ruling, there is less immediate concern that federal grants or contracts will be interrupted on the basis that they fund “equity-related” activities or that a grantee or contractor will be subject to the threat of the False Claims Act for engaging in DEI programs or policies. On its face, the scope of the Court’s ruling is quite broad, as it prevents not only False Claims Act actions but also “any other enforcement action.”

The ruling is not a final ruling and could be reversed on appeal or altered by the court itself, in whole or in part, as the matter proceeds. Thus, issues raised by the J20 and J21 executive orders are worth reviewing, although some of the immediacy is removed at this time.

In addition, one should not assume that the Court’s injunction addresses all legal concerns with respect to DEI programs and policies currently in place. As a general matter, an entity engages in unlawful discrimination when it makes decisions based on an individual’s race, color, ethnicity, sex or various other protected characteristics. Despite the Court’s preliminary injunction, there remains the risk of liability based on illegal discrimination, even if the illegal discrimination resulted from well-intentioned efforts to increase diversity. Stated another way, some programs and policies may have had compliance issues before the J20 and J21 executive orders and those issues are not affected by the preliminary injunction and should be assessed and addressed if warranted. Additionally, there remains uncertainty about the interplay between the issued injunction with the Feb. 14, 2025 Dear Colleague Letter (DCL) from the Department of Education. While the DCL is largely based on principles that are articulated in the now hobbled J20 and J21 executive orders, it is not clear that the Court’s injunction extends to all aspects of the recent DCL.

As before this latest development, DEI programs, policies and initiatives should be reviewed to ensure their compliance with existing anti-discrimination law. Close attention should also be paid to the rapidly occurring developments against the backdrop of enforcement actions by both federal and state officials, funding and reimbursement implications of the programs and the possibility of private litigation.

Bond continues to follow these and related developments closely. Please contact a Bond attorney in the higher education practice or the Bond attorney with whom you normally work, for questions, concerns and tailored consultation.

On Jan. 21, 2025, President Trump signed an Executive Order (EO), “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” Broadly speaking, the EO purported to prohibit what it characterized as unlawful “Diversity, Equity and Inclusion” programs (a term it did not explicitly define). Among other things, the EO encouraged enforcement action against organizations or institutions sponsoring such programs, and directed the Attorney General and the Secretary of Education to issue guidance to institutions of higher education that receive federal grants or participate in Title IV FSA programs regarding measures and practices required to comply with the Supreme Court’s decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (SFFA).

On Feb. 14, 2025, some initial guidance was issued, in the form of a Dear Colleague Letter (DCL) from the federal Department of Education, Office for Civil Rights. The February 14 DCL provides a statement of the position of the Department of Education (Department) on the “nondiscrimination obligations of schools and other entities that receive federal financial assistance from the Department.” The DCL “explains and reiterates” the Department’s view of “existing legal requirements under Title VI of the Civil Rights Act of 1964, the Equal Protection Clause of the United States Constitution, and other relevant authorities.”

The DCL states that discrimination on the basis of race, color and national origin has been and will continue to be illegal. The DCL discusses the Supreme Court’s decision in SFFA and states that, although the decision addressed college admissions, the holding of SFFA applies more broadly, “If an educational institution treats a person of one race differently than another person because of that person’s race, the educational institution violates the law.”

The DCL expands upon the Department’s view of this principle:

Federal law thus prohibits covered entities from using race in decisions pertaining to admissions, hiring, promotion, compensation, financial aid, scholarships, prizes, administrative support, discipline, housing, graduation ceremonies, and all other aspects of student, academic, and campus life. Put simply, educational institutions may neither separate or segregate students based on race, nor distribute benefits or burdens based on race.

The DCL takes a position on several issues that may have been features of some post-SFFA DEI programs. For example, the DCL states that a “school may not use students’ personal essays, writing samples, participation in extracurriculars, or other cues as a means of determining or predicting a student’s race and favoring or disfavoring such students.” This statement references the SFFA decision which states that “universities may not simply establish through application essays or other means the regime we hold unlawful today.” In this regard, the use of these items in ways that do not predict an applicant’s race or favor or disfavor an applicant based on race does not appear to violate the Department’s interpretation of SFFA.

The DCL also states that “relying on non-racial information as a proxy for race and making decisions based on that information, violates the law.” Again, the facts would seem to matter greatly here as to what is a proxy for protected characteristics versus what criteria are lawful.

The DCL states that “It would, for instance, be unlawful for an educational institution to eliminate standardized testing to achieve a desired racial balance or to increase racial diversity.” Elimination of criteria not tied to race – for instance, not using standardized tests post-pandemic after proceeding without them during the pandemic years – should remain permissible under the DCL unless tied to achieving certain demographic results.

The DCL also calls into question DEI program features that:

[P]reference certain racial groups and teach students that certain racial groups bear unique moral burdens that others do not. Such programs stigmatize students who belong to particular racial groups based on crude racial stereotypes. Consequently, they deny students the ability to participate fully in the life of a school.

The DCL concludes with the following summary of the Department’s position:

The Department intends to take appropriate measures to assess compliance with the applicable statutes and regulations based on the understanding embodied in this letter beginning no later than 14 days from today’s date, including antidiscrimination requirements that are a condition of receiving federal funding.

All educational institutions are advised to: (1) ensure that their policies and actions comply with existing civil rights law; (2) cease all efforts to circumvent prohibitions on the use of race by relying on proxies or other indirect means to accomplish such ends; and (3) cease all reliance on third-party contractors, clearinghouses, or aggregators that are being used by institutions in an effort to circumvent prohibited uses of race. Institutions that fail to comply with federal civil rights law may, consistent with applicable law, face potential loss of federal funding.

The DCL requires immediate analysis by educational institutions. The first area noted in the advice section – ensuring that polices comply with the existing civil rights laws – should be undertaken if such an analysis has not been conducted recently. The SFFA decision, the Trump Administration executive orders, and this DCL letter should all be considered and taken into account in that analysis. The second area noted – use of proxies for race – is simple to state but more nuanced and complicated to analyze, as the law has shifted for higher education institutions based on Supreme Court interpretations and institutional approaches and rationales have also likely shifted over time. The third area – use of third parties – is less clear as to scope and the Department’s interpretation, and its impact on current practices. This will require a case-by-case assessment of the program features and their history and usage, as well as consideration of the DCL’s positions and the underlying law.

We anticipate that some of the interpretations of current law as set forth in this DCL may be subject to legal challenge. This DCL arrives in the same week that several states’ Attorneys General asserted a different interpretation of what is permitted by federal law than that articulated in the Executive Order underlying the DCL. Given the flurry of activity, we recommend prompt consultation with legal counsel to assess the impact of these developments on your institution.

Bond attorneys are following these, and related legal developments, closely. If your institution would like further guidance, please reach out to an attorney in our higher education practice or the Bond attorney with whom you are regularly in contact.

On Feb. 5, 2025, President Trump signed an Executive Order, “Keeping Men Out of Women’s Sports.”  The Executive Order states that “[i]n recent years, many educational institutions and athletic associations have allowed men to compete in women’s sports,” a situation that the Order states has denied women and girls equal athletic opportunity.

The Executive Order states:

“Therefore, it is the policy of the United States to rescind all funds from educational programs that deprive women and girls of fair athletic opportunities, which results in the endangerment, humiliation, and silencing of women and girls and deprives them of privacy. It shall also be the policy of the United States to oppose male competitive participation in women’s sports more broadly, as a matter of safety, fairness, dignity, and truth.”

This Executive Order follows another order signed by the President on Jan. 20, 2025, “Defending Women From Gender Ideology Extremism And Restoring Biological Truth To The Federal Government,” which sets more broadly the federal government’s position that there are two immutable biological binary sexes, male and female, and that the Executive Branch will enforce all sex-protective laws accordingly.

Effective Feb. 5, 2025, the Executive Order directs the Secretary of Education to:

• Enforce Title IX of the Education Amendments of 1972 to “affirmatively protect all-female athletic opportunities and all-female locker rooms,” including through regulations and policy guidance; and
• Prioritize Title IX enforcement actions against educational institutions and athletic institutions composed of or governed by educational institutions that deny women an equal opportunity to participate in athletics by “requiring them, in the women’s category, to compete with or against or to appear unclothed before males.”

The Executive Order also directs all executive departments and agencies to review grants and educational programs and “where appropriate” to “rescind funding to programs that fail to comply with the policy established in this order.”

The Executive Order may be challenging for educational institutions, particularly those with transgender female students currently participating on girls and women’s teams. Additionally, in jurisdictions with state or local laws, including the State of New York, that extend rights based on gender identity, the Executive Order conditions federal funding on actions that may be inconsistent with state and local laws. College and university leadership should consult with legal counsel about the impact of this Executive Order on their athletic programs.

Bond attorneys are following these, and related legal developments, closely. If your institution would like further guidance, please reach out to an attorney in our higher education practice or the Bond attorney with whom you are regularly in contact.

On Jan. 9, 2025, the Eastern District of Kentucky held in State of Tennessee, et al. v. Miguel Cardona, et al. that the U.S. Department of Education’s 2024 Final Rule implementing Title IX is “unlawful.” This court decision applies nationwide.

This is not the first time the 2024 Final Rule has been successfully challenged. Even before yesterday’s ruling, several courts had issued injunctions, resulting in the 2024 regulations having no effect in 26 states and at a multitude of additional individual colleges and universities across the country.

The court determined in State of Tennessee that the Final Rule suffered from several legally fatal defects, including that the Final Rule went farther than permitted by Title IX in its definition of sex to include gender identity, its definition of sex-based harassment, and the scope of the Rule’s jurisdictional application. According to the Eastern District of Kentucky, the Final Rule impeded individuals’ First Amendment rights, violated the Spending Clause, and is “arbitrary and capricious.”

The fact that the 2024 Final Rule has been struck down is not necessarily a surprise. The 2024 Final Rule was part of the Biden administration’s Title IX agenda which the incoming Trump administration was expected to revisit and reverse. The timing of the change – coming prior to the administration taking office and without the notice associated with the rule making process – adds a layer of confusion and complexity for impacted institutions.

As of today, those colleges and universities that had been operating pursuant to the 2024 Final Rule will need to revert to a practice that is compliant with the 2020 regulations. This does not necessarily mean that all aspects of an institution’s 2024 Title IX policy and procedures must be discarded. For example, some institutions opted to retain a live hearing model with cross-examination under the 2024 Title IX regulations, and this is the required adjudication process pursuant to the 2020 regulations. Similarly, the 2024 Title IX regulations provided for increased protections and accommodations for pregnant students and, while those aspects of the regulations are no longer subject to enforcement, they do not necessarily contravene the 2020 regulations.

There are intricacies that will need to be considered well beyond these examples, and it is possible that the Department will appeal this decision and/or issue interim guidance. In a particular case – particularly a pending case – the question of how an institution should react to the State of Tennessee decision is a nuanced topic to be discussed with the institution’s legal counsel.

Bond’s Higher Education Practice Group will continue to monitor developments and assess the implications of this significant decision. If you have any questions, please contact E. Katherine Hajjar, Laura H. Harsharger, any attorney in the firm’s higher education practice or the Bond attorney with whom you have regular contact. 

On July 1, 2024, revised regulations governing federal student financial assistance programs became effective. The regulations, which can be found at 34 C.F.R. 668.23(d), require institutions that participate in the federal student assistance programs under Title IV of the Higher Education Act to provide annual financial reports to the U.S. Department of Education (ED or the Department). Additional guidance was released on Oct. 31, 2024 by Federal Student Aid, an office of the ED.[1]

One requirement of the revised regulation that may be relevant to certain institutions of higher education is the disclosure of all “related parties,”[2] including the relevant identifying information of such related parties, as defined by the FASB Accounting Standards Codification (ASC) 850, in their reports to ED.

ASC 850 defines a “related party” as follows:

a. Affiliates of the entity.

b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity.

c. Trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management.

d. Principal owners of the entity and members of their immediate families.

e. Management of the entity and members of their immediate families.

f. Other parties with which the entity may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

Although ED’s guidance issued in conjunction with the revised regulations states that “the related party disclosure requirement put into the regulations is not an expanded requirement, it has been the Department’s practice of requiring the level of detail now specified in the regulations,”[3] many institutions may not have been aware of such requirements. Federal Student Aid further clarified that the “the new regulations require institutions to include specific information on related party disclosures to clearly identify the related party being disclosed that had previously only been identified as possible information to include in the disclosure.” (emphasis added).

The institution must provide information that “include[s], but is not limited to, the name, location and a description of the related entity including the nature and amount of any transactions between the related party and the institution, financial or otherwise, regardless of when they occurred” (34 C.F.R. 668.23(d)(1)). With respect to higher education institutions, the ASC 850 definition of a “related party” could include a trustee, a high level administrator,[4] an immediate family member of such trustee or administrator, an affiliated entity or other parties (e.g., financial institution, insurance provider, contractor, professional service provider, etc.) with which the institution may deal depending on the level of control, influence or ownership between the parties. Additionally, if there are no related party transactions during the audited fiscal year or related party outstanding balances reported in the financial statements, a note must be added to the institution’s financial statements to disclose this fact.

The Department has provided a FAQ document that clarifies who might be a “related party” and provides examples of under what circumstances a report would be required.[5] For example, the guidance states:

Question: The institution’s president’s spouse established an endowment fund of $500,000 five years before the reporting year-end. The donor's relationship to the president and the president's relationship with the institution has not changed. Even though an endowment is a perpetual gift, there would be no related party disclosure in the current fiscal year because the contribution was made five years ago, correct?

Answer: It depends on whether the donor maintains any level of control over the endowment/donation/gift. For any period where control exists, it remains a related party transaction and must be reported.

Question: A trustee promises to give $700,000 over three years in the current reporting year. Under GAAP, nonprofit institutions recognize contribution revenue, with a time restriction (three-year promise) and a pledge receivable. In the current reporting period, the $700,000 promise will be disclosed: pledge receivable and restricted revenue. In subsequent reporting years the institution would report cash receipts on the pledge and the reduced receivable balance. In other words, the institution reports the reduced receivable balance and the cash receipts every reporting year until the pledge is fulfilled. Correct?

Answer: Yes. This would be reported in all three years as a related party transaction, as indicated in the example.

Question: Clarification is needed on the phrase found in 34 CFR 668.23(d)(1), “regardless of when the (related party) transaction occurred” and how it applies in the following example:

The provost’s adult daughter is the CEO of a financial institution that provided a line of credit to the college three years ago. The line of credit is a $1,000,000 liquidity facility that has not been drawn upon, but it is still available. The provost resigned last year, before the reporting period/fiscal year began. Is it correct that for the current reporting period, there is no related party disclosure because the provost is no longer employed by the college?

Answer: Yes, to the extent that the former provost has no association with the institution.

Question: If the provost was still employed by the college, the off-balance sheet line of credit facility would be disclosed along with the name and location of the related party (the provost’s adult daughter), correct?

Answer: Yes.

Despite the language of the ED guidance, it appears that the Department’s decision and subsequent FAQ document has at least made more explicit its requirement that institutions report any transactions between a trustee, administrator or the family members of a trustee or administrator, as well as a financial institution that has provided a current or future source of funds to the institution, as transactions between related parties. Moreover, Federal Student Aid’s guidance reinforces that:

[The Department] expects an institution to have a system of internal controls that is adequate to provide reasonable assurance about an institution’s compliance with the Department’s regulations, including the existence of related party relationships and transactions, as well as being able to identify the related parties. The institution’s internal controls must be sufficiently rigorous to provide for reasonable assurance that, when an institution’s financial statements include that it has disclosed all of its related party transactions or that it has no related party transactions, the disclosure is complete and accurate.

The revised regulations are in effect and will govern annual reports to ED concerning the use of their Title IV funds. Because there is still lingering uncertainty regarding the scope of disclosure, we recommend that institutions review their conflict of interest policies and consult with their accountants and legal counsel to assess current reporting practices and implement any additional procedures to ensure compliance.

If you have any questions or concerns related to disclosure requirements of institutions of higher education please contact Thomas W. Simcoe, Delaney M. R. Knapp or the attorney at the firm with whom you are regularly in contact.

---

[1] Federal Student Aid, Disclosure of Related Party Transactions in Financial Statements (Oct. 31, 2024), available at: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2024-10-31/disclosure-related-party-transactions-financial-statements.

[2] Note that the regulations appear use “related party” and “related entity” interchangeably.

[3] U.S. Department of Education, Financial Responsibility Regulations—Questions and Answers FR-Q20 (Oct. 31, 2023), available at Financial Responsibility Regulations - Questions and Answers | U.S. Department of Education.

[4] ASC 850-10-20 defines “Management” as “Persons who are responsible for achieving the objectives of the entity and who have the authority to establish policies and make decisions by which those objectives are to be pursued. Management normally includes members of the board of directors, the chief executive officer, chief operating officer, vice presidents in charge of principal business functions (such as sales, administration, or finance), and other persons who perform similar policy making functions. Persons without formal titles also may be members of management.”

[5] U.S. Department of Education, Financial Responsibility Regulations—Questions and Answers (Oct. 31, 2023), available at Financial Responsibility Regulations - Questions and Answers | U.S. Department of Education.

New Title IX regulations became effective on August 1, 2024, and contain extensive requirements for colleges and universities that receive federal Title IV funds to provide accommodations for students who are pregnant or who have recently given birth.

Read More >> Accommodations for Pregnant and Parenting Students: New Rules, New Challenges

The U.S. Department of Education (ED) has announced a revised deadline for submitting required data under the Financial Value Transparency and Gainful Employment (FVT/GE) rules.

Read More >> ED Delays Financial Value Transparency and Gainful Employment Reporting

On Sept. 12, 2024, the U.S. Department of Education’s Office for Civil Rights (OCR) released two new resources aimed at helping schools (including colleges and universities) and school administrators comply with the 2024 amendments to the Title IX Regulations, which went into effect on Aug. 1, 2024. The resources explain how the 2024 Title IX Regulations clarify and update longstanding obligations related to Title IX coordinator duties, as well as prohibitions on sex discrimination based on pregnancy or related conditions and parental, family or marital status. These resources complement other previously released guidance documents and indicate OCR’s pointed attention to these issues. Below are some of the key points contained in each resource.[1]

The first resource, 2024 Title IX Regulations: Impact on Title IX Coordinator Duties, focuses on new and updated duties specific to Title IX Coordinators. The document addresses the following questions:

• What training must be provided to a Title IX Coordinator?
• How must a Title IX Coordinator monitor for barriers to reporting sex discrimination?
• What steps must a Title IX Coordinator take in response to possible sex discrimination?
• When is a Title IX Coordinator not required to respond?
• What actions must a Title IX Coordinator take with regard students who are pregnant or experiencing pregnancy-related conditions?
• What are the recordkeeping responsibilities related to a Title IX Coordinator’s role?

The second resource, 2024 Title IX Regulations, Nondiscrimination Based on Pregnancy or Related Conditions & Parental, Family, or Marital Status, clarifies prohibitions on sex discrimination on these bases for students, employees and applicants for admission or employment (collectively the “protected groups”).[2] Schools must not (1) discriminate against individuals in the protected groups based on pregnancy or related conditions; (2) treat those in the protected groups differently based on their parental, family or marital status; or (3) punish or retaliate against those in the protected groups for exercising a right under Title IX, such as seeking pregnancy-related leave or access to a lactation space.

In regard to applicants for admission and in addition to the above prohibitions, a school must not treat an applicant’s pregnancy or related conditions differently than any other temporary medical condition.

Concerning students, schools have additional duties under Title IX. Upon proper notice of a student’s pregnancy or related conditions, a school must take specific actions, such as providing reasonable modifications, allowing voluntary leave, reinstatement and/or access to a lactation space. The school must also tell the student about its responsibilities to pregnant students, including its obligations to respond to sex discrimination and limit sharing of private information, and provide the school’s notice of nondiscrimination. Schools are required to allow the student voluntary access to other parts of the school’s education program or activity that are separate and comparable to the general program or activity. Schools must also allow a student to take a voluntary leave of absence and be reinstated to the academic status and, as practicable, to the extracurricular status that the student held when the leave began. A school must also allow a student access to a lactation space. Notably, Title IX does not require a student to provide documentation of their pregnancy or related conditions for their school to take specific actions, unless doing so is necessary and reasonable to determine modifications or other steps. The resource includes information about (1) reasonable modifications, (2) the duration of a leave of absence and a student’s return, (3) participation in another portion of the school’s program, and (4) lactation spaces.

For employees, a school must treat pregnancy or related conditions the same as any other temporary medical condition for all job-related purposes. A school must also treat pregnancy or related conditions as a justification for a voluntary leave of absence without pay for a reasonable period of time if the school does not have an employee leave policy or if an employee has insufficient leave or accrued employment time to qualify for such a leave under the applicable policy. At the end of a voluntary leave of absence, the school must reinstate the employee to the status held when the leave began or to a comparable position without a decrease in the rate of compensation, loss of promotional opportunities, or any other right or privilege of employment. Additionally, a school must provide an employee reasonable break time to express breast milk or breastfeed and ensure access to a lactation space. Regarding marital status, a school cannot ask an applicant about their marital status during the hiring process.

Please note that as of Aug. 28, 2024, pursuant to federal court orders, OCR is currently enjoined from enforcing the 2024 Final Rule in certain states[3] and schools. Accordingly, the 2024 Final Rule and the recent guidance documents do not strictly apply in those states and schools, but may still be useful to help understand OCR’s enforcement priorities since the 2020 regulations contained similar prohibitions on sex-based discrimination.

On Sept. 18, 2024, Bond is hosting a complimentary Zoom webinar discussing pregnant students’ rights under Title IX Regulations and will be presented by attorneys Jane Sovern, Barbara Lee and Alison Roach.

If you would like access to the webinar or have questions about the material covered in this memorandum, please contact Christopher Cruz Sierra or any attorney in Bond’s higher education practice.

[1] This document is provided as general guidance and does not provide a comprehensive summary of the requirements of the 2024 Regulations. Institutions should confer with legal counsel to ensure full compliance with the law.

[2] Pregnancy or related conditions is defined as: (1) pregnancy, childbirth, termination of pregnancy or lactation; (2) medical conditions related to pregnancy, childbirth, termination of pregnancy or lactation; or (3) recovery from pregnancy, childbirth, termination of pregnancy, lactation or related medical conditions. Title IX also prohibits discrimination based on menstruation, perimenopause, menopause or their related conditions.

[3] Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia and Wyoming.

This week, Gov. Kathy Hochul signed the Student Lifeline Act amending the New York Education Law to require that degree-granting higher education institutions educate students, faculty and staff about New York’s 9-8-8 Suicide and Crisis Lifeline.

Read More >> New York Requires 9-8-8 Suicide and Crisis Lifeline Information Shared and Added to College Student ID Card

Dear Higher Education Readers … The spring of 2024 not only brought with it the release of Season 3 of the Netflix blockbuster Bridgerton, but also the release of revised Title IX regulations.

Read More >> You Must Make Haste! The Deadline to Implement the 2024 Title IX Regulations is Fast Approaching . . . For Most IHEs!

Challenges to the rules of the National Collegiate Athletics Association (NCAA) have increased in recent years. The U.S. Supreme Court struck the NCAA’s rule against paying intercollegiate athletes for use of their name, image and likeness (NIL) in 2021.[1] The General Counsel of the National Labor Relations Board, a federal agency that regulates labor relations in the private sector, stated that intercollegiate athletes can be classified as employees and allowed them to attempt to unionize[2]—as the recent case involving Dartmouth College demonstrated.[3] The NCAA and several Division I athletic conferences recently settled a $2.8 billion lawsuit brought by former intercollegiate athletes who demanded payment for NIL usage that accrued prior to the Supreme Court’s 2021 ruling.[4] And on July 11, 2024, the U.S. Court of Appeals for the Third Circuit ruled that six intercollegiate athletes could maintain a lawsuit against the NCAA and the institutions they attended that claims that they are employees under the federal Fair Labor Standards Act (FLSA) and thus deserve pay for the time spent in athletics activities.[5]

The students, who had participated in one or more Division I sports (including football, baseball, swimming and diving, tennis, and soccer), claimed that the amount of control of their activities levied by their coaches, and the restrictions on how they spent their time while enrolled, meant that they met the requirements of the wage and hour law for employment protection. Thus, they claimed, they deserved at least minimum wage for the hours that they spent in these mandatory activities. The defendants disagreed, arguing that the students were amateur athletes, not professionals, and did not qualify for the protections of the FLSA. The defendants moved to have the case dismissed by the U.S. District Court for the Eastern District of Pennsylvania, but that court denied the motion, ruling that Division I intercollegiate athletes were analogous to unpaid interns.[6] That court analyzed the students’ claims under a test used by the U.S. Department of Labor for determining whether interns were entitled to pay under the  FLSA.[7] The court also reviewed a 2016 case, Glatt v. Fox Searchlight Pictures, Inc.,[8] that analyzed whether college students serving as interns should be paid. The trial court in Johnson found that the allegations of the students with respect to the time they spent, their lack of control over how they spent their time, and several other of the factors involving interns, could meet the test for employee status, and that dismissal was inappropriate. The NCAA and college defendants asked the trial court to certify its ruling for an interlocutory appeal, rather than waiting until the trial court had ruled on the merits, and that court did so.[9] The appellate court agreed to hear the appeal.

On July 11, 2024, the U.S. Court of Appeals ruled 3-0 that the students could proceed with their case.[10] The appellate court rejected the “amateurism” defense, and agreed with the trial court’s denial of the motion to dismiss, although for other reasons, finding that the students might be able to provide sufficient evidence to meet the FLSA requirements for employee status. The appellate court found that the trial court’s use of the test for interns was erroneous, but affirmed the trial court’s ruling on different grounds. The appellate court said that the Glatt test did not control this set of facts because interns are learning skills that relate to their academic training, while intercollegiate athletics did not relate to the students’ academic curriculum. The court noted that time spent in required athletics activities actually was detrimental to the students’ academic performance because the time and scheduling requirements interfered with their choice of courses and, in some cases, their choice of majors.

Referring to earlier cases involving the determination of whether a particular individual or set of individuals were “employees” entitled to FLSA protections, the appellate court created a four-part test:

1. Whether the individual(s) perform services for another party;

2. Whether the services are necessarily and primarily for the other party’s benefit;

3. Whether the individual(s) are under that party’s control or right of control; and

4. Whether the services are performed in return for express or implied compensation or in-kind benefits.[11]

The court added: “The touchstone remains whether the cumulative circumstances of the relationship between the athlete and the college or NCAA reveal an economic reality that is that of an employee-employer.”[12]

It is likely that this litigation will be protracted because the stakes are so high and the arguments are so novel. A ruling that Division I intercollegiate athletes are employees could potentially entitle them to additional protections under other employment laws, such as worker’s compensation, employment discrimination laws, collective bargaining laws, or Social Security requirements, to name a few. For colleges and universities, determining which laws may apply, and whether a particular issue involves the athlete’s status as a student or as an employee, could be complicated. The application of laws affecting intercollegiate athletics has changed dramatically in just a few years, and it is quite likely that more change will come. 

For any questions on how this information may affect your institution, please contact Barbara A. Lee, any attorney in Bond’s higher education practice or the Bond attorney with whom you regularly work.

[1] Alston v. NCAA, 141 S. Ct. 2141 (2021).

[2] NLRB, Statutory Rights of Players at Academic Institutions (Student-Athletes) under the National Labor Relations Act, General Counsel Memorandum 21-08, September 29, 2021.

[3] On February 5, 2024, a NLRB Regional Director ruled that the players on Dartmouth College’s varsity basketball team were employees under the NLRA’s definition, and ordered the College to bargain with the union representing these players. Trustees of Dartmouth College, Case No. 01-RC-325633 (February 5, 2024). The players voted to be represented by a union later that spring.

[4] Kristi Dosh, “10 Things to Know about the NCAA’s House Settlement,” Forbes, May 24, 2024, available at https://www.forbes.com/sites/kristidosh/2024/05/24/10-things-to-know-about-the-ncaas-house-settlement/

[5] Johnson v. NCAA, 2024 U.S. App. LEXIS 16953 (3d Cir. July 11, 2024).

[6] Johnson v. NCAA, 556 F. Supp. 3d 491 (E.D. Pa. 2021).

[7] U.S. Department of Labor. Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act, January 2018. https://www.dol.gov/agencies/whd/fact-sheets/71-flsa-internships.

[8] 811 F.3d 528 (2d Cir. 2016).

[9] 2021 U.S. Dist. LEXIS 246324 (December 28, 2021). An interlocutory appeal is an appeal of a ruling that is not final; its purpose is to resolve an unresolved matter of law prior to a ruling on the merits of a case.

[10] Although all three judges supported the outcome of the case, one judge, in a concurring opinion, stated that he disagreed with the reasoning of the case, but not its outcome.

[11] Johnson v. NCAA, 2024 U.S. App. LEXIS 26953 at *30.

[12]  Id.

On July 8, 2024, the U.S. Department of Education’s Office for Civil Rights (OCR) announced that it had reached a resolution agreement with Brown University. This action followed an investigation concluding that Brown University had failed to comply with Title VI of the Civil Rights Act of 1964 regarding 75 reported antisemitic and Islamophobic incidents between October 2023 and March 2024 despite the University’s “notable proactive steps to support a nondiscriminatory campus environment, including updating its relevant policies and procedures in February 2024.”

Title VI Requirements and OCR Findings

Title VI mandates that institutions receiving federal funding must protect students from discrimination based on race, national origin, or shared ancestry. Colleges and Universities are required to take measures to end, eliminate, and prevent discrimination and harassment upon receiving reports. Recently, OCR has asserted that compliance with Title VI requires a more vigorous and methodical approach and many institutions previously employed.

In an outcome letter accompanying the resolution agreement, OCR expressed concerns highlighting what it described as the University’s inadequate response to some discriminatory incidents. Specifically, OCR concluded that offices involved in handling complaints had inconsistent responses and that some responsive processes were terminated if a reporting party did not reply to an initial outreach email. OCR found that this was inconsistent with the University’s obligation to assess whether a hostile environment exists independently of a complainant’s continued involvement.

Furthermore, despite commending Brown’s efforts, OCR criticized the revised policies and procedures for their lack of clarity in addressing and resolving antisemitic or other ancestry-based discrimination. OCR also questioned whether the University had reassessed Fall 2023 reports of antisemitism and other shared ancestry discrimination predating the policy revisions to determine whether further actions were required to comply with Title VI.

Resolution Agreement and Action Items

The University and OCR agreed on a Resolution Agreement outlining five “Action Items”:

Policy Revisions: The University must further revise its policies and procedures to enhance and ensure consistency in responses to discrimination allegations and clearly communicate these responses to students and faculty.

Annual Training: Brown will conduct annual nondiscrimination training for all employees and students. This training will include a specific section addressing discrimination and harassment based on national origin, with concrete examples.

Detailed Recordkeeping: The University is required to maintain detailed records of all complaints alleging discrimination, including harassment based on national origin.

Review: The University will conduct a review of its response to complaints and reports of antisemitic and other shared ancestry discrimination during the 2023–2024 and 2024–2025 academic years, and take remedial actions if required.

Climate Assessment and Action: Brown will analyze the results of any Title VI assessments conducted and, by the end of the Fall 2024 semester, identify and implement actions to improve the overall campus climate.

Readers who have been following OCR’s recent Title VI enforcement actions will find all of these requirements familiar and all institutions should consider implementing similar measures in order to reduce risk and bolster Title VI compliance. 

Conclusion

The resolution with Brown University is the fourth such agreement OCR has reached regarding allegations of shared ancestry violations of Title VI since the onset of the Israel-Hamas conflict. Similar complaints have led to OCR resolutions with City University of New York, University of Michigan, and Lafayette College. These agreements, alongside recent OCR guidance—including a Dear Colleague Letter and Fact Sheet—underscore OCR’s amplified commitment to enforcing Title VI compliance.

Educational institutions should take note of the detailed requirements outlined in these settlements, including robust complaint response, comprehensive training, meticulous recordkeeping, and proactive climate assessments.

For any questions on how this information may affect your institution, please contact Seth Gilbertson, any attorney in Bond’s higher education practice or the Bond attorney with whom you regularly work.

*Special thanks to Summer Law Clerk Grant Haffenden for his assistance in the preparation of this memo.